Abstract
This thesis contains five self-contained chapters. In “The Effect of Centrally Bargained Wages on Firm Growth”, the author studies how firms adjust their hiring and investments in response to higher collectively bargained wage increases. Firms absorb labor cost shocks by increasing sales growth. This is accomplished through increased hiring and capital deepening. In addition, firms change their labor mix towards more skilled workers. “Financing Constraints and Insurance Demand in Small and Medium-Sized Enterprises” examines how better access to external finance affects the demand for insurance. The authors find that firms with better access invest more and reduce their insurance demand. “Non-Business Risks and Firm Growth” explores how firms recover after being hit by an insured loss to their physical assets. On average firms re-invest, however, they still suffer a loss in output driven by a reduction in employment. These results are stronger for firms that have worse access to external capital, which suggests that insurance is not perfect. In “The Effect of Financial Constraints on Inventory Holdings”, the author studies how financing constraints affect firms’ optimal choice of inventory holdings. Tighter financing constraints affect total inventories, but do not affect the ratio of inventories to assets. Thus, optimal inventory policy seems to be based on operational rather than financial concerns. “Spillover Effects of Insurance Claims on Insurance Demand: Evidence from Sweden” analyzes how firms change their insurance demand when their peer firms suffer an insured loss. Firms keep their level of insurance demand when their peers have a shock. Notably, this result holds also for more salient shocks, such as fires.